Texas – May 26, 2010

The content below was excerpted from the Texas Appendix (PDF, 49 pages) of GAO's most recent bimonthly review of the Recovery Act.[1]

What We Did

We reviewed the use of Recovery Act funds in Texas for weatherization, clean water and drinking water, and public housing projects. For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-605SP. For these programs, we focused on how funds were being used, how safeguards were being implemented, and how results were being assessed:

  • The Weatherization Assistance Program (WAP), administered by the Texas Department of Housing and Community Affairs (TDHCA), was selected because Recovery Act funding ($327 million) constitutes a manifold expansion of the program in Texas. Before receiving Recovery Act funding, TDHCA averaged approximately $5 million annually in WAP funding from the U.S. Department of Energy (DOE). Among other objectives, we examined (1) how TDHCA is managing the significant increase in WAP funding, (2) the extent to which the weatherization measures being installed in homes result in energy cost savings, and (3) internal controls TDHCA has in place to ensure that Recovery Act funds are spent appropriately. At TDHCA, we reviewed WAP implementation plans and interviewed program officials. To make on-site observations, we visited weatherization projects in Houston and San Antonio, areas where significant levels of Recovery Act weatherization funding had been allocated and where varying weatherization approaches were being used.
  • We selected the Clean Water State Revolving Fund (SRF) and the Drinking Water SRF programs because they are now getting underway in Texas and have not been addressed in our previous bimonthly reports. We reviewed project eligibility criteria and related documentation obtained from the Texas Water Development Board (TWDB), which administers the programs, and interviewed TWDB officials. Also, we made on-site observations and conducted interviews at a clean water project in Austin (the Hornsby Bend Biosolids Management Plant) and a drinking water project in Laredo (the Jefferson Water Treatment Plant). We selected Austin because according to TWDB, at an estimated cost of $31.8 million, the project nearly meets the full 20 percent green reserve requirement for Clean Water SRF projects in Texas.[2] We selected Laredo because the $48 million drinking water project is receiving the largest amount of funding of all Recovery Act SRF projects in Texas.
  • The public housing program was selected because of the funding obligation deadline that was scheduled during this bimonthly reporting period. That is, by March 17, 2010, housing agencies were required to obligate 100 percent of the Capital Fund formula grants allocated under the Recovery Act. At two offices of the U.S. Department of Housing and Urban Development (HUD) in Texas-the Fort Worth Regional Office and the San Antonio Field Office-we reviewed funding obligation data and interviewed officials to discuss the types and extent of assistance and guidance that HUD provided to public housing authorities for obligating and expending Recovery Act funds. We made on-site observations regarding use of these funds by public housing agencies in four cities. Specifically, we selected a large city (El Paso) and a small city (McKinney) that had obligated (as of Jan. 30, 2010) less than 50 percent of their Capital Fund formula grants allocated under the Recovery Act; also, we selected a large city (San Antonio) and a small city (Ferris) that had obligated 50 percent or more of their funds.

Further, in Texas, we obtained state and local government perspectives on overall use and impact of Recovery Act funds. Specifically, at the state level, we obtained perspectives from the Office of the Governor, staff of the Legislative Budget Board,[3] and the State Comptroller's Office; and, at the local level, we contacted city management officials in Austin, Dallas, and Houston. Also, we reviewed efforts by state and local government to promote accountability for use of Recovery Act funds. We focused in particular on efforts by the Office of the Governor, the State Auditor's Office, and city audit offices in Austin, Dallas, and Houston.[4]

What We FoundBack to top

Weatherization Assistance Program

For various reasons, TDHCA experienced delays in beginning work on the almost 34,000 homes projected to be weatherized using Recovery Act funds. According to Texas officials, the delay in weatherizing homes in Texas is due primarily to DOE actions, such as denying the state's request to expand the network of weatherization providers (subgrantees). In contrast, DOE contended that Texas has not undertaken sufficient actions to implement the program in spite of several meetings DOE held with Texas to accelerate the program. Regardless of the reasons, the delay in weatherizing homes has delayed realization of the potential economic benefits of the Recovery Act funds allocated to WAP and energy savings for many low-income Texans eligible for weatherization assistance. TDHCA is accelerating its progress in weatherizing homes, but several challenges remain. As of April 7, 2010-almost a year into the program-11 of the 44 subgrantees had not completed weatherizing any homes. To enhance the pace of weatherization activity, TDHCA recognizes that it will need to increase attention to weatherizing multifamily units-an approach with risks in that TDHCA and subgrantees have limited experience and training on weatherizing multifamily units. TDHCA has internal controls for WAP to help ensure that Recovery Act funds are spent according to program objectives and the state's 44 subgrantees are adequately monitored. However, several potential refinements for enhancing internal controls and monitoring have been identified in reviews conducted by TDHCA's Internal Audit Division and us.

Clean Water and Drinking Water

The state of Texas received $180.9 million in Recovery Act funding for the state's Clean Water SRF[5] and $160.7 million in Recovery Act funding for the Drinking Water SRF. According to officials, TWDB established a solicitation and ranking process and met the requirement to have Recovery Act-funded SRF projects under contract by February 17, 2010. In total, TWDB selected 46 projects to receive Recovery Act funding-21 Clean Water SRF projects and 25 Drinking Water SRF projects. TWDB officials stated that because of lower-than-expected construction bids, and lower-than-anticipated contract awards, the 46 projects include 10 more than initially anticipated-that is, 2 additional Clean Water SRF projects and 8 additional Drinking Water SRF projects. According to TWDB officials, the state encountered a challenge in awarding Recovery Act funding because the federal Environmental Protection Agency (EPA) has not established clear criteria for green reserve projects. According to EPA and TWDB, multiple oversight and monitoring efforts, both within TWDB and by EPA auditors and program staff, are underway or planned to ensure accountability for use of Recovery Act funds by subrecipients.

Public housing

Of the 415 public housing agencies in Texas, 351 collectively received $119.8 million in Public Housing Capital Fund formula grants from HUD under the Recovery Act. Collaborative efforts by HUD and the recipient agencies resulted in the obligation of all of the funds by the 1-year deadline established by the Recovery Act, or March 17, 2010. Upcoming deadlines are for expenditures-that is, the Recovery Act states that 60 percent of the Public Housing Capital Fund formula grant funds must be expended within 2 years of HUD obligating the funds to PHAs, and 100 percent of the funding must be expended within 3 years. To provide accountability for use of the funds, the HUD offices we contacted in Texas have ongoing and planned reviews to monitor whether public housing agencies are complying with Recovery Act procurement policy and related requirements and are disbursing and expending funds for approved activities.

Use and impact of funds

Recovery Act funds continue to support a range of programs in Texas. As of March 28, 2010, Texas state entities had spent about $8.3 billion of the approximately $17.5 billion in Recovery Act funds awarded to the state, according to the State Comptroller's Office. The share of Recovery Act funds that have been spent varies among programs, depending on program-specific characteristics. Program officials also described their plans or exit strategies regarding the end of Recovery Act funding. At the local government level, city officials we contacted in Austin, Dallas, and Houston cited various positive effects that Recovery Act funds have had on their communities. However, the officials noted the amounts of Recovery Act funds awarded are relatively small compared to the respective city's overall budget and, thus, have had limited overall budgetary impact.

Promoting accountability

State entities and the local governments we reviewed in Texas are taking actions to help ensure Recovery Act funds are used appropriately. The state of Texas has used its Single Audit to provide more timely feedback, such as early written communication of internal control deficiencies on Recovery Act programs. Moreover, the Texas State Auditor and other state officials are continuing to review and monitor Recovery Act funds. The city auditors we contacted in Austin, Dallas, and Houston are also taking actions to monitor Recovery Act funding, including early identification of risks related to the Recovery Act.

Full May ReportBack to top

Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
GAO-10-604
Recovery Act: States' and Localities' Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability
(Appendixes)
GAO-10-605SP
  • [1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
  • [2] That is, at least 20 percent of the funds provided under the Recovery Act for both Clean Water and Drinking Water SRF projects are to be used for green infrastructure, water or energy efficiency improvements, or other environmentally innovative projects.
  • [3] According to state officials, the Legislative Budget Board is a permanent joint committee of the Texas legislature that develops budget and policy recommendations for legislative appropriations for all agencies of state government, as well as completes fiscal analyses for proposed legislation. The lieutenant governor and House speaker serve as co-chairs of the board. Other members include the chairs of the House Appropriations Committee and Senate Finance Committee. See www.lbb.state.tx.us.
  • [4] As indicated, we contacted city management and audit officials in Austin, Dallas, and Houston to obtain local government perspectives on overall use and impact of Recovery Act funds and efforts to promote accountability for use of the funds. We selected these cities because they were awarded large amounts of Recovery Act funding and are located in different geographic areas of Texas, while collectively accounting for approximately 17 percent of the state's total population.
  • [5] Of the $180.9 million in Recovery Act funding for the Clean Water SRF, $179.1 million went to TWDB, and $1.8 million went to the Texas Commission on Environmental Quality.
GAO Contact
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Lorelei St James

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stjamesl@gao.gov

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